Currently, more and more publicly listed companies have realized the immense potential of blockchain technology and are actively incorporating it into their strategic layout. Many companies in the blockchain concept stock sector are experiencing strong development momentum, gaining significant attention and investment in the market.

Written by: JoyChen, EvanLu, Waterdrip Capital

As the global financial regulatory environment gradually clarifies, the cryptocurrency market is transitioning from a "niche circle" to the mainstream financial system. Since the U.S. election, Trump's presidency has had a positive impact on the cryptocurrency industry, promising to adopt more friendly regulatory policies, including establishing a national Bitcoin reserve and encouraging the expansion of Bitcoin mining activities in the U.S., which has boosted market confidence. In the following days, a widespread transmission began in the capital markets, and against this backdrop, multiple blockchain concept stocks experienced a general rise.

Currently, more and more publicly listed companies have recognized the immense potential of blockchain technology and are actively incorporating it into their strategic layout. Many companies in the blockchain concept stock sector are experiencing strong development momentum, gaining significant attention and investment in the market. These companies are driving digital transformation and value creation by introducing blockchain technology, gradually becoming important players in the industry. We have closely monitored many stocks in this field and observed their increasingly impressive performance in the capital markets, with greater development opportunities expected in the future driven by blockchain:

In recent years, especially with the regulatory dividends brought by the U.S. launch of cryptocurrency-related ETFs (such as Bitcoin spot ETFs), it marks that cryptocurrencies are no longer confined to a closed digital currency market but are deeply integrated with traditional capital markets. Grayscale, as a pioneer in this area, has seen its Bitcoin Trust (GBTC) become a bridge for traditional investors to enter the crypto market. Data shows that as of November 20, BlackRock's Bitcoin spot ETF (IBIT) has an asset management scale close to $45 billion, remaining in a state of net inflow almost since the beginning of the year. Meanwhile, Grayscale's Bitcoin spot ETF (GBTC) manages assets of about $20.3 billion, demonstrating investors' interest and confidence in this emerging asset class.

The current total market capitalization of the cryptocurrency market is approximately $3.2 trillion, which we can categorize into the following three main parts:

1. Bitcoin (BTC)

As the core asset of the entire crypto market, Bitcoin currently has a market capitalization of about $1.9 trillion, accounting for over 50% of the total cryptocurrency market capitalization. It is recognized as a store of value by both traditional finance and the native crypto community, and due to its anti-inflation characteristics and limited supply, it has become the preferred choice for institutional investors, often referred to as "digital gold." Bitcoin plays a pivotal role in the crypto market, stabilizing the market while providing an interconnected bridge between traditional assets and native on-chain assets.

2. Native On-Chain Assets

This includes public chain tokens (such as Ethereum ETH), decentralized finance (DeFi) related tokens, and functional tokens in on-chain applications. This area is diverse and highly volatile, with market performance driven by technological updates and user demand. Its current market capitalization is approximately $1.4 trillion, significantly lower than the market's high growth expectations.

3. The Combination of Traditional Assets and Crypto Technology

This area encompasses emerging projects such as the tokenization of real-world assets (RWA) on-chain and blockchain-based securitized assets. Currently, its market capitalization is only a few hundred billion dollars, but with the popularization of blockchain technology and the deep integration with traditional finance, this field is rapidly developing. By tokenizing traditional assets to enhance liquidity, it is also one of the main driving forces for future growth in the crypto market. We are confident in this part, believing it will drive traditional finance towards a more efficient and transparent digital transformation, releasing enormous market potential.

Why are we so optimistic about the growth potential of traditional assets?

In the past six months, Bitcoin's asset attributes have undergone a new evolution, and the dominant forces in the capital market have transitioned from old powers to new funding sources.

In 2024, the position of cryptocurrencies in traditional finance will be further solidified. Financial giants, including BlackRock and Grayscale, are launching exchange-traded products for Bitcoin and Ethereum, providing institutional and retail investors with more convenient digital asset investment channels, further confirming the connection with traditional securities.

At the same time, the trend of tokenizing real-world assets (RWA) is also accelerating, further enhancing the liquidity and coverage of financial markets. For example, Germany's state-owned development bank KfW issued two digital bonds totaling €150 million in 2024 using blockchain technology. These bonds were settled using distributed ledger technology (DLT), and French computer equipment manufacturer Metavisio issued corporate bonds, utilizing tokenization to provide capital support for its new manufacturing facility in India. This also shows that traditional financial institutions are leveraging blockchain technology to optimize operational efficiency, with many financial institutions already incorporating crypto technology into their business models.

Today, a funding cycle model centered on Bitcoin, using ETFs and the stock market as the main channels for capital inflow, and leveraging U.S. listed companies like MSTR as a platform, is continuously absorbing dollar liquidity and unfolding comprehensively.

The combination of traditional finance and blockchain will create more investment opportunities than native on-chain assets. This trend reflects the market's emphasis on stability and practical application scenarios. The traditional financial market has a solid infrastructure and mature market mechanisms, and combined with blockchain technology, it will unleash greater potential. In this regard, Waterdrip Capital, particularly its Pacific Waterdrip Digital Asset Fund, will focus on the innovative combination of traditional financial markets and the crypto industry in the future to seek investment opportunities in the integration field.

This research report will briefly analyze the growth patterns of blockchain concept stocks, especially their integration with on-chain assets, to uncover more innovative investment opportunities. For example, MSTR's issuance model demonstrates a typical path of exchanging dollar assets for on-chain assets through convertible bonds and stock issuance. Recently, MSTR's stock price has surged rapidly alongside Bitcoin's price increase, with its convertible bonds maturing in 2027 reaching a three-year high in yield, a strategy that has allowed its stock performance to far exceed that of traditional tech stocks.

From these perspectives, it can be seen that the future development of the crypto market is not just about the incremental growth of digital currencies themselves, but the enormous potential of integration with traditional finance. From regulatory dividends to changes in market structure, blockchain concept stocks are at a critical juncture of this major trend, becoming the focus of global investors.

We currently categorize blockchain concept stocks into the following types:

1. Asset-Driven Concepts:

Regarding blockchain stocks with asset allocation concepts, the company strategy is to treat Bitcoin as the main reserve asset. This strategy was first implemented by MicroStrategy in 2020 and quickly attracted market attention. This year, other companies such as the Japanese investment company MetaPlanet and the Hong Kong-listed company Boyaa Interactive have also joined in, with the acquisition of Bitcoin continuously increasing. MetaPlanet announced the introduction of the key performance indicator "Bitcoin Yield" (BTC Yield) established by MicroStrategy, with its third-quarter BTC Yield at 41.7%, and reaching as high as 116.4% in the fourth quarter (as of October 25).

Top 30 publicly listed companies globally treating Bitcoin as a reserve asset, data source: coingecko

Specifically, companies like MicroStrategy have adopted a strategy of introducing the key performance indicator "Bitcoin Yield" to provide investors with a new perspective for evaluating the company's value and investment decisions. This indicator is based on the diluted number of outstanding shares, calculating the number of Bitcoins held per share without considering Bitcoin price fluctuations, aiming to help investors better understand the company's actions in purchasing Bitcoin through the issuance of additional common stock or convertible instruments, focusing on measuring the balance between the growth of Bitcoin holdings and equity dilution. As of now, MicroStrategy's Bitcoin investment yield has reached 41.8%, indicating that the company has successfully avoided excessive dilution of shareholder interests while continuously increasing its holdings.

However, despite MicroStrategy's significant achievements in Bitcoin investment, the company's debt structure has raised market concerns. Reports indicate that MicroStrategy's total outstanding debt currently stands at $4.25 billion. During this period, the company has financed through multiple rounds of issuing convertible bonds, some of which also come with interest payments. Market analysts worry that if Bitcoin prices fall sharply, MicroStrategy may need to sell some Bitcoins to repay its debts. However, there are also viewpoints suggesting that due to MicroStrategy's stable traditional software business and low-interest-rate environment, its operating cash flow is sufficient to cover debt interest, making it unlikely that a sharp drop in Bitcoin prices would force the company to sell its Bitcoin assets. Additionally, MicroStrategy's stock market value currently stands at $43 billion, with debt representing a small proportion of its capital structure, further reducing liquidation risk.

While many investors are optimistic about the company's firm Bitcoin investment strategy, believing it will bring substantial returns to shareholders, some investors express concerns about its high leverage and potential market risks. Given the extreme volatility of the cryptocurrency market, any adverse market changes could significantly impact the asset value of such companies, and their stock prices are significantly premium relative to their net asset values, raising questions about the sustainability of this status. If stock prices experience a correction, it could affect the company's financing ability, thereby impacting its future Bitcoin purchasing plans.

1. Microstrategy (MSTR)

Business Intelligence Software Company

MicroStrategy was founded in 1989, initially focusing on business intelligence and enterprise solutions. However, since 2020, the company has transformed into the world's first publicly listed company to treat Bitcoin (BTC) as a reserve asset, a strategy that has fundamentally changed its business model and market position. Founder Michael Saylor played a key role in driving this transformation, evolving from an early Bitcoin skeptic to a staunch supporter of cryptocurrency.

Since 2020, MicroStrategy has continuously purchased Bitcoin through its own funds and bond financing. As of now, the company has accumulated approximately 279,420 Bitcoins, with a current market value close to $2.3 billion, accounting for about 1% of the total Bitcoin supply. The most recent purchase occurred between October 31 and November 10, 2023, acquiring 27,200 Bitcoins at an average price of $74,463. The average holding price of these Bitcoins is $39,266, while the current Bitcoin price has reached about $90,000, resulting in a paper profit for MicroStrategy of nearly 2.5 times.

Despite facing a paper loss of about $1 billion during the bear market of 2022, MicroStrategy has never sold any Bitcoin; instead, it chose to continue increasing its holdings. Since 2023, the strong rise in Bitcoin has significantly boosted MicroStrategy's stock price, with an investment return of 26.4% year-to-date and a cumulative investment return exceeding 100%.

MicroStrategy's current business model can be seen as a "BTC-based cyclical leverage model," raising funds through bond issuance to purchase Bitcoin. While this model brings high returns, it also carries certain risks, especially during periods of severe Bitcoin price volatility. According to analysis, Bitcoin prices would need to fall below $15,000 for the company to face liquidation risks, and given the current Bitcoin price is close to $90,000, this risk is minimal. Additionally, the company has a low leverage ratio, and strong demand in the bond market further enhances MicroStrategy's financial stability.

For investors, MicroStrategy can be viewed as a leveraged investment tool in the Bitcoin market. With expectations of steady increases in Bitcoin prices, the company's stock has significant potential. However, caution is warranted regarding the medium- to long-term risks associated with debt expansion. Over the next 1 to 2 years, MicroStrategy's investment value remains worthy of attention, especially for investors optimistic about the Bitcoin market outlook, as it represents a high-risk, high-reward asset.

2. Semler Scientific (SMLR)

Semler Scientific is a company focused on medical technology, and one of its innovative strategies is to use Bitcoin as a primary reserve asset. In November 2024, the company disclosed that it had recently purchased 47 Bitcoins, increasing its total holdings to 1,058 Bitcoins, with a total investment amount of approximately $71 million. Part of the funding for these acquisitions comes from operating cash flow, indicating that Semler is attempting to strengthen its asset structure through Bitcoin holdings, positioning itself as a representative of asset management innovation.

However, Semler's core business remains focused on its QuantaFlo device, which is primarily used for diagnosing cardiovascular diseases. Nevertheless, Semler's Bitcoin strategy is not merely a financial reserve; in the third quarter of 2024, the company realized an unrealized gain of $1.1 million from its Bitcoin holdings, despite a 17% year-on-year decline in revenue, providing Semler with a financial hedge amid economic fluctuations.

Although Semler's current market capitalization is only $345 million, significantly lower than MicroStrategy, its strategy of using Bitcoin as a reserve asset has led investors to view it as a "mini MicroStrategy."

3. Boyaa Interactive

Boyaa Interactive is a Hong Kong-listed company primarily engaged in gaming, ranking among the top developers and operators in China's online board game industry. Since the second half of last year, it has begun exploring the crypto market, aiming to fully transform into a Web3 listed company. The company has made large-scale purchases of Bitcoin and Ethereum, as well as investments in multiple Web3 ecosystem projects, and has signed a subscription agreement with Waterdrip Capital's Pacific Waterdrip Digital Asset Fund SPC for strategic cooperation in Web3 game development and the Bitcoin ecosystem. The company has stated: "Purchasing and holding cryptocurrencies is an important measure for our group to develop and layout Web3 business, and it is also an important component of our asset allocation strategy." As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoins and 15,445 Ethereum, with total costs of approximately $143 million and $42.578 million, respectively.

It is worth mentioning that due to the recent activity in the cryptocurrency market, both Bitcoin and cryptocurrencies have seen significant increases. Based on the closing prices of cryptocurrencies on the 12th, Boyaa Interactive has an unrealized gain of nearly $90.22 million on Bitcoin and about $7.95 million on Ethereum, totaling nearly $100 million in unrealized gains.

The continuous rise in cryptocurrency prices has sparked heightened market attention towards related concept stocks. Taking the Hong Kong stock market as an example, as of November 12, BlueFocus Interactive rose by 41.18%, New Fire Technology Holdings increased by 27.40%, and OKC Cloud Chain rose by 11.65%, showcasing the strong performance of blockchain-related companies. The Hong Kong blockchain market is still in its early development stage, but the policy environment is continuously improving, with recent policies supporting blockchain development encouraging open innovation and creating a favorable growth space for companies. Some companies rely on the asset-driven effects brought by cryptocurrency price fluctuations while actively exploring the practical applications of blockchain technology in gaming, finance, and the metaverse. Future market growth will depend on the effectiveness of technology implementation and the improvement of the ecosystem, providing investors with clearer direction and confidence.

The value of the cryptocurrencies held by Boyaa Interactive has reached approximately HKD 2.2 billion. This means that the total value of the cryptocurrencies currently held by Boyaa Interactive exceeds the company's current market capitalization. In the second quarter of 2024, the company recorded revenue of approximately HKD 104.8 million, a year-on-year increase of 5.8%. Among this, revenue from web games and mobile games was HKD 29 million and HKD 69 million, respectively, while the digital asset appreciation gain was HKD 6.74 million. Regarding the reasons for revenue growth, Boyaa stated in its announcement: "This is mainly due to the digital asset appreciation gains from the cryptocurrencies held by our group."

At the same time, the company plans to increase its cryptocurrency holdings by up to $100 million over the next 12 months. Additionally, Boyaa Interactive has formed a team focused on Web3 game development and related infrastructure research and development. Benefiting from the significant growth of cryptocurrency assets, its first-quarter profit increased by 1,130% year-on-year, driving the company's stock price to nearly triple since the beginning of the year, becoming a typical asset-driven blockchain concept stock in the market. For this stock, Boyaa Interactive's performance relies on the volatility of the cryptocurrency market, and its stock price may continue to be driven by the growth in asset value.

### Mining Concepts

In recent years, blockchain mining concept stocks have received significant market attention, especially amid the price fluctuations of cryptocurrencies like Bitcoin. Mining companies benefit not only from the direct profits of digital currencies but also participate to some extent in the layout of other high-growth industries, particularly artificial intelligence (AI) and high-performance computing (HPC) businesses. With the rapid development of AI technology, the demand for AI computing power is increasing swiftly, providing new support for the valuation of mining concept stocks. Particularly, as power contracts, data centers, and their supporting facilities gradually become scarce, mining companies can gain additional revenue by providing computing power infrastructure for AI demands.

However, we generally believe that not all mining companies can fully meet the needs of AI data centers. Mining operations prioritize cheap electricity supply, often choosing locations with lower prices and unstable short-term power, maximizing profits. In contrast, AI data centers place greater emphasis on the stability of power supply, making them less sensitive to electricity price fluctuations and more inclined towards long-term stable power supply. Therefore, not all existing power equipment and data centers of mining companies are suitable for direct transformation into AI data centers.

Mining concept stocks can be categorized into the following types:

Mining companies with mature AI/HPC businesses: These companies not only have a presence in the mining sector but also possess mature AI or HPC businesses, supported by technology giants like NVIDIA. For example, Wulf, APLD, CIFR, and others not only participate in cryptocurrency mining but also build AI computing platforms and engage in AI inference, integrating mining and AI computing demands to gain more market attention.

Focusing on mining and accumulating coins: These companies primarily focus on mining operations and hold large amounts of Bitcoin and other digital currencies. CleanSpark (CLSK) is one representative of this type, with its coin accumulation accounting for 17.5% of its market value. Additionally, Riot Platforms (RIOT) is a similar company, with its coin accumulation reaching 21% of its market value. These companies aim to profit from the future market price increases by accumulating Bitcoin and other cryptocurrencies.

Diversified composite businesses: These companies engage not only in cryptocurrency mining and coin accumulation but also explore AI inference, AI data center construction, and other areas. Marathon Digital (MARA) is a representative of this type, with its coin accumulation accounting for 33% of its market value. These companies typically reduce risks in a single area through diversified business layouts while enhancing overall profitability.

As AI demand increases, AI computing power and high-performance computing businesses will increasingly integrate with blockchain mining operations, potentially further enhancing the valuations of mining companies. In the future, mining companies may not only be "miners" of digital currencies but also become important infrastructure providers behind the development of AI technology. Although this path is fraught with challenges, many mining companies are accelerating their layouts in AI computing power and data center construction to secure a foothold in this emerging field.

1. MARA Holdings (MARA)

One of North America's largest corporate Bitcoin self-mining companies, founded in 2010 and listed in 2011. The company is dedicated to mining cryptocurrencies, focusing on the blockchain ecosystem and the generation of digital assets. The company provides hosting mining solutions based on its proprietary infrastructure and smart mining software, primarily mining Bitcoin. Similar to Riot, Marathon has also experienced a 12.6% decline in stock price, followed by further declines. However, Marathon's stock price has rapidly increased over the past year.

According to the latest data from October, MARA (Marathon Digital) has achieved a hash rate of 32.43 EH/s, becoming the first publicly listed mining company to reach this scale. It is expected that after the activation of its new 152 MW power capacity, the hash rate will increase by approximately 10 EH/s. Recently, MARA has added 152 MW of mining power capacity by acquiring two data centers in Ohio and constructing a third new site, with plans to fully operate by the end of 2025. MARA's Chief Financial Officer Salman Khan stated that the cost of this asset acquisition is approximately $270,000 per MW, and these deployments are expected to help the company achieve a hash rate target of 50 EH/s in 2024.

Additionally, on November 18, MARA announced the issuance of $700 million in convertible senior notes, maturing in 2030. The funds raised will primarily be used to purchase Bitcoin, repurchase notes maturing in 2026, and support the expansion of existing operations. MARA expects to use the net proceeds from these notes, with up to $200 million allocated for repurchasing some of the convertible notes maturing in 2026, while the remaining funds will be used to acquire more Bitcoin and for general corporate purposes, including working capital, strategic acquisitions, expanding existing assets, and repaying additional debt. This move further demonstrates MARA's long-term bullish stance on Bitcoin.

2. Core Scientific (CORZ)

Blockchain Infrastructure and Cryptocurrency Mining Services

Founded in 2017, Core Scientific Inc. operates primarily in two segments: equipment sales and hosting services, as well as self-built mining facilities for Bitcoin mining. The company generates revenue through sales based on consumption contracts and providing hosting services, while the revenue from its digital asset mining segment comes from the computing equipment operated by the company, which processes transactions on the blockchain network and participates as part of a user pool, yielding returns in digital currency assets.

Recently, Microsoft (MSFT.US) announced plans to spend nearly $10 billion from 2023 to 2030 renting servers from the AI startup CoreWeave. CoreWeave has signed a new high-performance computing hosting agreement with Bitcoin mining giant Core Scientific for an additional 120 megawatts (MW). Through several rounds of expansion, CoreWeave currently hosts a total of 502 MW of GPU capacity at Core Scientific's data centers. Since signing a multi-billion dollar contract with CoreWeave, Core Scientific's stock price has surged nearly 300%. The company also plans to retrofit some data centers to host over 200 MW of GPUs for CoreWeave.

This 12-year hosting contract is expected to bring Core Scientific a total revenue of $8.7 billion. Meanwhile, although its Bitcoin mining hash rate remains stable, its market share has declined from 3.27% in January to 2.54% in September.

Overall, Core has perfectly absorbed the combination of two hot themes: AI and Bitcoin, especially in the AI data center sector, where Core Scientific has secured large contracts and is actively expanding its customer base, demonstrating strong growth potential. Despite a decline in market share in Bitcoin mining, the company's progress in AI data centers provides strong support for its long-term stable growth, and future increases can still be anticipated.

3. Riot Platforms (RIOT)

Headquartered in Colorado, USA, Riot Platforms focuses on blockchain technology construction, support, and cryptocurrency mining operations. Previously, the company invested in several blockchain startups, including the Canadian Bitcoin exchange Coinsquare, but has now completely shifted its focus to cryptocurrency mining.

Riot's stock price has experienced significant volatility, particularly during declines in Bitcoin prices, with the company's stock dropping as much as 15.8%. However, despite this, the company's stock has still risen over 130% in the past year.

Although recent market positives have driven the stock price to soar 66% in just one week, Riot's operational performance is not ideal. According to its Q3 2024 financial report, the company reported total revenue of $84.8 million, with Bitcoin mining revenue accounting for $67.5 million, and a net loss of $154.4 million, translating to a loss of $0.54 per share, far exceeding the market expectation of a loss of $0.18 per share. Additionally, Riot's loss in the second quarter was $84.4 million, compared to a net loss of only $27.4 million in the same period last year. Overall, Riot's losses continue to widen; although the stock price has risen in the short term, this increase is merely in line with the broader market, and whether it can achieve long-term stock price growth remains uncertain.

4. CleanSpark (CLSK)

Green Energy Cryptocurrency Mining

CleanSpark is a company focused on Bitcoin mining using renewable energy. In Q2 2024, the company's revenue grew to $104.1 million, an increase of $58.6 million from $45.5 million in the same period last year, representing a growth rate of 129%. However, for the three months ending June 30, 2024, the net loss was $236.2 million, or $1.03 per share, compared to a loss of $14.1 million, or $0.12 per share, in the same period last year. Notably, despite a market rally in early November, CleanSpark (CLSK) did not benefit from it due to a trading halt during that period. The company's founder explained that the halt was due to a calculation error in the equity subscription ratio during a recent acquisition process. The company also announced the completion of its acquisition of GRIID, aiming to increase the total hash rate of its mining facilities to 400 MW in the coming years. At the same time, CleanSpark holds a significant amount of Bitcoin and other digital currencies, with its coin accumulation accounting for 17.5% of its market value, indicating that a substantial portion of its market capitalization is supported by its Bitcoin holdings.

From a stock performance perspective, CleanSpark is one of the representative Bitcoin miners focused on renewable energy, with long-term growth potential due to its green mining strategy and relatively low energy costs. The acquisition of GRIID and the expansion of mining capacity indicate a proactive strategic layout for increasing market share and enhancing competitiveness. However, despite significant revenue growth, the large extent of losses will be a key factor influencing investor concerns about its profitability and cash flow, which will impact future stock price trends. Given the volatility of Bitcoin prices and energy costs, CleanSpark's stock price may experience significant fluctuations.

5. TeraWulf (WULF)

Cryptocurrency Mining Using Green Energy

As operational risks decrease and profit margins improve, energy companies are gradually becoming an important force in the cryptocurrency industry. TeraWulf, a cryptocurrency subsidiary of Beowulf Mining Plc, recently revealed in regulatory filings that it expects its mining capacity to reach 800 MW by 2025, accounting for 10% of the current computing power of the Bitcoin network. TeraWulf focuses on providing sustainable cryptocurrency mining solutions, particularly utilizing renewable energy sources such as hydro and solar power, while also developing AI data centers.

Recently, TeraWulf announced an increase in the total size of its 2.75% convertible bonds to $425 million, planning to use $118 million of this for stock buybacks. This financing also includes an over-allotment option, allowing initial purchasers to add $75 million within 13 days of issuance. The newly issued bonds will mature in 2030, with part of the funds allocated for stock buybacks and the remainder for general corporate expenses.

TeraWulf stated that it will prioritize stock buybacks and continue to advance its organic growth in high-performance computing and AI, as well as potential strategic acquisitions. Following this announcement, TeraWulf's stock price has risen nearly 30% since last Friday, outperforming Bitcoin and other mining companies. Recently, mining companies have been raising funds through convertible bonds and Bitcoin-backed loans to cope with the decline in hash rate prices following the Bitcoin halving.

Overall, TeraWulf's layout in clean energy and AI mining demonstrates strong growth potential. In the short term, the company may benefit from the market's heightened focus on green energy and AI mining. However, considering the volatility of the mining industry and the overall market environment, long-term performance will still require ongoing attention and assessment. Under the current circumstances, TeraWulf's stock price increase has some speculative factors, but it also has the potential for further growth through its sustainable development strategy.

6. Cipher Mining (CIFR)

Bitcoin Mining Company

Cipher Mining is primarily focused on developing and operating Bitcoin mining data centers in the United States, aiming to enhance the infrastructure of the Bitcoin network.

Recently, Cipher Mining announced an expansion of its credit cooperation with Coinbase, establishing a total of $35 million in term loans. According to the financial report disclosed on November 1, the company increased its existing $10 million credit line to $15 million and added a new $35 million term loan.

Additionally, as demand for AI technology grows in the crypto market, Cipher Mining's AI business valuation has also increased. However, compared to peer companies like CORZ, APLD, and WULF, Cipher Mining's stock price increase has lagged. While the company has made some progress in infrastructure investment in Bitcoin mining, its advancements in AI technology deployment have been relatively slow, which may affect its short-term stock price performance.

7. Iris Energy (IREN)

Bitcoin Mining Using Renewable Energy

Iris Energy focuses on Bitcoin mining globally through green energy, particularly hydropower. Its clean energy-driven Bitcoin mining business is centered on environmental sustainability, which is a key competitive advantage that distinguishes it from other mining companies. Compared to traditional coal and oil energy, IREN uses clean energy for mining to reduce carbon emissions and lower operational costs. IREN currently operates multiple clean energy-driven mining facilities, particularly investing heavily in regions rich in clean energy, such as Canada and the United States.

Additionally, IREN is attempting to establish a presence in the cloud computing space, but the prospects for this segment are not as clear as its clean energy mining business. While cloud computing can somewhat reduce the demand for mining hardware and provide investors with more flexible profit avenues, its revenue model and market acceptance are still in the early stages, and it has yet to demonstrate significant profitability compared to traditional Bitcoin mining. Therefore, IREN's exploration in cloud computing can be seen more as a trial project, far from maturity, and its valuation is difficult to overestimate.

In terms of monetizing energy assets, IREN's progress and potential currently lag behind some of its competitors, such as CIFR (Cipher Mining) and WULF (Stronghold Digital Mining). These companies have made some progress in effectively integrating traditional energy assets and applying clean energy, giving them stronger market competitiveness. While IREN's unique advantages in green energy mining cannot be overlooked, its monetization process is still relatively slow compared to CIFR and WULF, making it difficult to generate sufficient cash flow in the short term.

8. Hut 8 (HUT)

Headquartered in Canada, Hut 8 is a company primarily engaged in cryptocurrency mining operations in North America and is one of the largest innovative digital asset miners in North America. The company operates large-scale energy infrastructure and consistently adheres to environmentally friendly operational practices.

In 2023, Hut 8's annual revenue reached $121.21 million, a year-on-year increase of 47.53%. As of the quarter ending September 30, 2024, revenue further grew to $43.74 million, a year-on-year increase of 101.52%. This growth brought the total revenue for the past 12 months to $194.02 million, with a year-on-year growth rate of 209.07%.

According to the third-quarter report, Hut 8 has accelerated the construction of its digital infrastructure platform in recent months and has pushed forward its commercialization process. The company's various metrics show strong growth momentum, and it continues to strengthen its business development.

9. Bitfarms (BITF)

Headquartered in Canada, Bitfarms focuses on the development and operation of Bitcoin mining farms and continues to expand its mining scale. The company recently announced plans for an additional investment of $33.2 million to upgrade 18,853 Antminer T21 Bitcoin mining machines originally planned for procurement from Bitmain to the S21 Pro model. According to the third-quarter financial report, Bitfarms has modified its procurement agreement with Bitmain, expecting the upgraded mining machines to be delivered between December 2024 and January 2025. According to analysis from TheMinerMag, thanks to the adoption of the latest generation of mining machines, Bitfarms has significantly reduced its mining machine costs: from $40.6 per PH/s in the first quarter to $35.5 in the second quarter, and further down to $29.3 in the latest quarter.

Overall, Bitfarms has demonstrated strong growth potential by updating mining equipment and optimizing procurement strategies, enhancing mining efficiency while reducing costs. This strategy not only improves the company's profitability but also strengthens its position in the highly competitive cryptocurrency market. With further reductions in mining machine costs, Bitfarms is expected to maintain an advantage in Bitcoin mining, especially in the context of rising Bitcoin prices or increased market demand.

10. HIVE Digital Technologies (HIVE)

Cryptocurrency Mining Company, HPC Business.

Hive Digital recently announced the acquisition of 6,500 Canaan Avalon A1566 Bitcoin mining machines and plans to increase its total hash rate to 1.2 EH/s, reflecting the company's ongoing investment in the cryptocurrency mining sector. However, since the end of last year, Hive Digital has clearly stated that it will shift more resources and focus towards high-performance computing (HPC) in the future. The company believes that the HPC business has higher profit margins compared to Bitcoin mining and possesses certain technical barriers, which can lead to more sustainable revenue growth. To this end, Hive is transforming 38,000 Nvidia data center GPU cards originally used for Ethereum and other cryptocurrency mining into on-demand GPU cloud services, marking the beginning of its new chapter in AI and HPC.

This strategic transformation aligns with industry development trends. Similar to other mining companies like Hut 8, Hive has quickly turned its attention to HPC and AI businesses following Ethereum's transition from POW to POS. Today, Hive's HPC and AI businesses can generate revenue 15 times higher than Bitcoin mining, and the demand for GPU computing is rapidly growing. According to a report by Goldman Sachs, the GPU cloud services market has broad prospects. Fortune Business Insights predicts that by 2030, the GPU services market in North America will grow at a compound annual growth rate of 34%. Especially with the increasing demand for AI projects, technologies like the large language models behind ChatGPT are just beginning, and almost all enterprises require substantial GPU computing power to support the operation and development of these technologies.

From an investment perspective, Hive Digital's transformation strategy lays a solid foundation for its future growth. Although the company still has a presence in the cryptocurrency mining sector, with the rapid development of its HPC and AI businesses, Hive is gradually reducing its over-reliance on traditional Bitcoin mining, opening up more diversified and high-profit revenue channels.

### Infrastructure and Solutions Providers

Mining machine manufacturing / blockchain infrastructure concept stocks refer to the stocks of companies that focus on Bitcoin mining hardware, blockchain infrastructure construction, and related technology services. These companies primarily profit by designing, manufacturing, and selling specialized mining equipment (such as ASIC miners), providing cloud mining services, and operating the hardware infrastructure required for blockchain networks. Mining machine manufacturers are at the core of blockchain infrastructure as they provide the hardware devices used for mining cryptocurrencies like Bitcoin. ASIC (Application-Specific Integrated Circuit) miners are the most common type of mining machines, specifically designed for cryptocurrency mining. The revenue of mining machine manufacturers mainly comes from two sources: sales of mining machines and hosting and cloud mining services.

Generally, the price of mining machines is influenced by various factors, including fluctuations in the Bitcoin market, production costs of mining machines, and the stability of the supply chain. For example, when Bitcoin prices rise, miners' earnings also increase, leading to a higher demand for mining machines, which in turn drives revenue growth for mining machine manufacturers. In addition to mining machine production, blockchain infrastructure also includes mining pools, data centers, and other cloud service platforms that provide computing power support.

For investors, mining machine manufacturers and blockchain infrastructure companies may offer high growth opportunities, especially during bullish cycles in the cryptocurrency market. The demand for mining machines is positively correlated with Bitcoin prices; however, these companies also face high volatility risks, influenced by market sentiment, technological innovation, and regulatory policies. Therefore, when investing in such concept stocks, in addition to having a positive outlook on the cryptocurrency market, it is also necessary to consider the potential risks brought by market uncertainties.

1. Canaan (CAN)

Research and Development of Blockchain Hardware Products

Canaan was established in 2013 and released the world's first blockchain computing device based on ASIC chips in the same year, leading the industry into the ASIC era and gradually accumulating rich experience in chip mass production. In 2016, the mass production of 16nm products marked Canaan as the first company in mainland China to enter the advanced process camp. Since 2018, Canaan has successively achieved the world's first mass production of self-developed 7nm chips and the mass production of the RISC-V self-developed commercial edge intelligent computing chip K210.

Since its establishment, Canaan has become an important player in the blockchain hardware field, leveraging its leading ASIC mining machine technology and self-developed chip advantages. Compared to other mining machine manufacturers, Canaan and BT­DR, which can increase mining profitability with self-produced mining machines, have more potential benefits. Over the past year, despite the market experiencing a bear phase, Canaan's mining machine sales have remained at a high level, especially against the backdrop of a rebound in Bitcoin prices, with future sales expected to grow significantly.

The biggest potential benefit factor is the change in mining machine prices. If mining machine prices rise—such as due to demand exceeding expectations or supply constraints—the increase in mining machine prices may drive up the valuation multiples of mining companies, creating a "Davis Double Play" effect that enhances the overall valuation of the company. Canaan recently signed two significant institutional orders, including HI­VE's procurement of 6,500 Avalon A1566 mining machines, which will further boost its sales and revenue growth, also demonstrating market recognition and demand for its mining machines.

From the perspective of Canaan's fundamentals and market expectations, the current stock price does not fully reflect its future potential. Assuming the Bitcoin market rebounds and mining machine prices remain stable or increase, Canaan's sales revenue and profitability will see significant growth, further driving up its valuation.

2. Bitdeer (BTDR)

Providing Cloud Mining Services and Mining Machine Manufacturing

Bitdeer offers global cryptocurrency mining computing power, allowing users to lease computing resources for Bitcoin mining. The company provides computing power sharing solutions, including cloud computing and computing power markets, while also offering one-stop mining machine hosting services that cover deployment, maintenance, and management to support efficient cryptocurrency mining.

Recently, Bitdeer launched its next-generation water-cooled mining machine SEALMINER A2, as the second generation of the SEALMINER series. The SEALMINER A2 mining machine is equipped with Bitdeer's self-developed second-generation chip SEAL02, which has achieved significant improvements in energy efficiency, technical performance, and stability compared to the A1 series. The A2 series includes both air-cooled SEALMINER A2 and water-cooled SEALMINER A2 Hydro models, designed to meet mining needs in different environments. Both mining machines utilize advanced cooling technology, optimizing power consumption control and computing performance to ensure stable operation under high loads. According to test data, the A2's energy efficiency is 16.5 J/TH, with a hash rate of 226 TH/s, slightly lower than mainstream mining machines like Bitmain and MicroBT, which have an energy efficiency of 13.5 J/TH. The company also stated that the A2 has entered mass production, with an expected increase of 3.4 EH/s in hash rate by early 2025. Bitdeer also plans to complete the tape-out design of the SEAL03 chip in the fourth quarter, targeting an energy efficiency of 10 J/TH.

Overall, Bitdeer is in a critical period of innovation and growth, especially in the water-cooled mining machine and computing power sharing sectors. Notably, as a cloud mining platform, it provides computing power leasing and hosting services, rather than just traditional mining machine sales. Unlike traditional mining machine manufacturing companies, cloud mining and hosting companies are more flexible in capital and resource allocation, able to expand market share by providing on-demand computing resources to meet different scales of investment needs. Therefore, while the overall trend of the cryptocurrency market affects Bitdeer's performance, the diversity and innovation of its business model may allow it to maintain relative stability amid market fluctuations.

3. BitFuFu (FUFU)

Cloud Mining Services and Digital Asset Management Services

BitFuFu is a Bitcoin mining and cloud mining company supported by Bitmain, dedicated to providing cloud mining services to global users, allowing them to participate in Bitcoin mining without purchasing hardware. According to the latest third-quarter financial report, BitFuFu holds approximately $104 million in digital assets, equivalent to 1,600 Bitcoins. Among them, 340 Bitcoins belong to the company, while the rest belong to clients of cloud mining and hosting services. BitFuFu is not only a service provider in the Bitcoin mining sector but also an important Bitcoin asset manager.

In addition, BitFuFu has reached a two-year credit agreement with Antpool, a subsidiary of Bitmain, with a maximum loan limit of $100 million. This credit agreement further solidifies the partnership between BitFuFu and Antpool and enhances its flexibility in capital operations. With the volatility in the Bitcoin market, more and more Bitcoin mining companies (such as MARA and CleanSpark) are also beginning to adopt financing methods like Bitcoin collateral loans, flexibly utilizing their Bitcoin assets to support business development and capital expansion.

From an investment perspective, BitFuFu is backed by Bitmain and Antpool, giving it a unique advantage in hardware supply and computing power resources, enabling BitFuFu to provide efficient and stable mining equipment and help optimize mining farm operations and pool support. Therefore, BitFuFu has significant technical and resource advantages in the cloud mining sector, capable of attracting more users and capital.

Overall, as the Bitcoin market gradually warms up and the demand for cloud mining increases, BitFuFu is likely to benefit from this trend. Compared to traditional mining companies, cloud mining allows investors to participate in Bitcoin mining at a lower cost, especially suitable for users without hardware resources.

### Exchange Concept:

1. Coinbase (COIN)

Cryptocurrency trading platform, trading and storage services for digital currencies

Coinbase was founded in 2012 and went public on NASDAQ in 2021, becoming the first and only legally compliant listed cryptocurrency exchange in the United States. This status makes it the largest cryptocurrency exchange by trading volume in the U.S., attracting many institutions to choose it as their preferred platform for custodial crypto assets. Coinbase, in partnership with Circle, issued the USD-pegged stablecoin USDC and expanded into diversified businesses such as staking custody. Additionally, Coinbase is a core holding of ARK Invest fund manager Cathie Wood, who has publicly expressed her optimism about the company multiple times.

Coinbase's stock price is highly correlated with Bitcoin, for example, its historical peak occurred on November 8, 2021, almost coinciding with Bitcoin's historical peak (November 10, 2021). At the recent low point (November 21, 2022), the stock price hit bottom in sync with Bitcoin prices. From a high of $368.9 in 2021 to a low of $40.61, the stock price experienced a maximum decline of 89%, with volatility even exceeding Bitcoin's 78% decline during the same period, reflecting Coinbase's amplified leverage effect in the crypto market.

In the recent six months, Coinbase's stock price fluctuations have been mainly influenced by regulatory pressures and the approval process for Bitcoin ETFs. In 2023, the approval of Bitcoin ETFs was initially seen as a significant positive, but the market later worried that such products might divert from Coinbase's traditional business model, causing the stock price to retreat at one point. Nevertheless, the market dynamics after the election brought good news for Coinbase.

With Trump's election victory, expectations of his crypto-friendly policies boosted market confidence, driving Coinbase's stock price to rise rapidly. The stock price briefly dipped to $185 at the beginning of the election but eventually soared to around $329. It is expected that in the relatively closed compliant crypto market in the U.S., the demand for Bitcoin investments from ordinary investors will continue to benefit Coinbase. As a leading legal exchange in the U.S., Coinbase has a solid fundamental position, and its highly compliant identity gives it a greater advantage when policies are favorable. In the future, as more ordinary investors enter the market, Coinbase is likely to attract significant traffic.

2. Bakkt Holdings (BKKT)

Bakkt is a leading cryptocurrency platform dedicated to providing compliant crypto asset custody and trading services for institutional investors. The company holds a crypto asset custody license issued by the New York State Department of Financial Services (NYDFS). Due to several security incidents involving various crypto asset custody platforms in recent years, Bakkt has gained trust, especially among institutional clients, thanks to its compliance and strong regulatory background.

Bakkt was initially founded by the Intercontinental Exchange (ICE) and later became an independent publicly traded company through a spin-off, showcasing the integration of traditional finance and the crypto economy. Recently, Bakkt's stock price has experienced significant increases, primarily due to the media and technology group (DJT) under Trump planning to fully acquire Bakkt. According to the Financial Times, Trump's company DJT is in deep acquisition negotiations with Bakkt, and if successful, the acquisition will further advance Trump's positioning in the cryptocurrency market and provide Bakkt with funding support and more development opportunities.

On the day the news was released, Bakkt's stock price surged by 162% and continued to rise by over 15% in after-hours trading. DJT's stock price also increased by about 16.7%. Additionally, Bakkt's market value before the acquisition was slightly above $150 million, based on the company's recent financial performance and the volatility of the crypto market. Although Bakkt's revenue has not met expectations (for the three months ending September 30, the company reported revenue of $328,000 and an operating loss of $27,000).

From an investment perspective, Bakkt is a company with enormous potential but still faces challenges. First, Bakkt has unique advantages in compliance and institutional services, especially as institutional investors gradually enter the market. Second, Bakkt's stock price has recently surged, mainly benefiting from Trump's group's acquisition intentions. This acquisition will provide Bakkt with more funding and resources, potentially accelerating its development in the cryptocurrency trading sector. However, Bakkt's past profitability has been poor, and its main revenue comes from crypto asset custody and trading services, the growth potential of which remains uncertain. Therefore, when investing in Bakkt, it is essential to consider the sustainability of its profit model and the intensity of market competition.

### Payment Concept:

Block (SQ)

Founded in 2009, Block is a payment service provider formerly known as Square. As early as 2014, Square began accepting Bitcoin as a payment method, and since 2018, the company has been active in the Bitcoin space. Starting in 2020, Block has made significant purchases of Bitcoin for payment operations and as a reserve asset for the company. In the third quarter of the 2024 fiscal year, Block's total net revenue reached $5.976 billion, achieving a robust growth of 6% compared to $5.617 billion in the same period last year. Excluding Bitcoin-related revenue, total net revenue grew to $3.55 billion, an increase of 11% year-on-year. Net profit turned from a net loss of $93.5 million in the same period last year to a profit of $281 million, a year-on-year increase of 402.1%.

The strong application support of Square's business and its good asset reserves, along with the stable cash flow generated by its operations, make it one of the more stable concept stocks. Based on this, influenced by the favorable factors for Bitcoin following Trump's election, Square achieved a 24% increase in the past half month.

As another payment concept stock, attention to Block can also extend to PayPal. As is well known, PayPal, as a global payment giant, provides digital payment services for merchants and consumers worldwide. In recent years, they have also shown strong interest in blockchain technology, with representative initiatives including the launch of the stablecoin PayPal USD (PYUSD) in 2023. This is an Ethereum-based stablecoin backed by the U.S. dollar, which is one of PayPal's core strategies in integrating digital payments with blockchain. PayPal also utilized PYUSD for blockchain investments for the first time, supporting a company focused on digital asset transfers and embedded financial platforms, Mesh.

In contrast, Block's focus in the blockchain field is more concentrated on Bitcoin, integrating it into payment services and company asset reserves.

### Summary:

The demand for blockchain concept stocks is rapidly growing, potentially even surpassing the demand for traditional tech stocks and cryptocurrencies themselves. As blockchain gradually expands from its initial cryptocurrency applications to broader industry solutions, the market demand for related technologies and infrastructure has significantly increased. Compared to traditional tech stocks, blockchain concept stocks exhibit more pronounced growth potential, as they rely not only on continuous technological innovation but are also closely related to the digital transformation of global financial markets and the trend towards decentralization.

As blockchain technology matures and the policy environment improves, the market prospects for blockchain concept stocks will become increasingly clear. Especially against the backdrop of governments around the world gradually clarifying their regulatory policies on crypto assets, blockchain companies are expected to experience explosive growth on a compliant basis. We look forward to more traditional industries adopting blockchain technology, driving further technological innovation and market demand in this field. Waterdrip Capital will continue to be optimistic about the long-term development potential of the blockchain sector, closely monitoring relevant companies and their technological progress, and actively investing attention. In the coming years, blockchain concept stocks are expected to become one of the most attractive investment directions in the global capital market.

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